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Minutes for
To:
Members of the Board
From:
Office Of the Secretary
July 8, 1963
Attached is a copy of the minutes of the
Board of Governors of the Federal Reserve System on
the above date.
It is not proposed to include a statement
with respect to any of the entries in this set of
minutes in the record of policy actions required to
be maintained pursuant to section 10 of the Federal
Reserve Act.
Should you have any question with regard to
the minutes, it will be appreciated if you will advise
the Secretary's Office. Otherwise, please initial
below. If you were present at the meeting, your
initials will indicate approval of the minutes. If
you were not present, your initials will indicate
only that you have seen the minutes.
Chin. Martin
Gov. Mills
Gov. Robertson
Gov. Balderston
Gov. Shepardson
Gov. King
Gov. Mitchell
11rjjAfl.
12
Alll)
Minutes of the Board of Governors of the Federal Reserve
System on Monday, July
8,
1963.
The Board met in the Board
Room at 10:00 a.m.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Martin, Chairman
Balderston, Vice Chairman
Mills
Robertson
Shepardson
King
Mr.
Mr.
Mr.
Mr.
Sherman, Secretary
Kenyon, Assistant Secretary
Fauver, Assistant to the Board
Mattras, General Assistant, Office
of the Secretary
Messrs. Noyes, Koch, Garfield, Holland,
Williams, Dembitz, Altmann, Bernard,
Eckert, Fisher, Swindler, Trueblood,
Wernick, and Yager, and Miss Stockwell
of the Division of Research and Statistics
Messrs. Furth, Sammons, Katz, Gekker, Goldstein,
Irvine, Mills, Nettles, and Swerling of
the Division of International Finance
Economic review and money market report.
The Division of
financial
International Finance presented a review of international
to the U. S.
developments, with special reference to their relationship
h and Statistics
balance of payments, after which the Division of Researc
ments.
reviewed domestic economic and money market develop
except
All members of the staff then withdrew from the meeting
and the following
Messrs. Sherman, Kenyon, Fauver, Noyes, and Mattras
entered the room:
Mr. Farrell, Director, Division of Bank Operations
Mr. Solomon, Director, Division of Examinations
tration
Mr. Johnson, Director, Division of Personnel Adminis
2204
-2-
7/8/63
Mr. Hexter, Assistant General Counsel
Mr. Conkling, Assistant Director, Division of Bank
Operations
Mr. Goodman, Assistant Director, Division of
Examinations
Mr. McClintock, Supervisory Review Examiner, Division
of Examinations
Discount rates.
The establishment without change by the
Federal Reserve Banks of Philadelphia, Chicago, Kansas City, and
San Francisco on July
3, 1963, of the rates on discounts and advances in
their existing schedules was approved unanimously, with the understanding that appropriate advice would be sent to those Banks.
Circulated or distributed items.
The following items, copies
of which are attached to these minutes under the respective item
numbers indicated, were approved unanimously:
Item No.
Letter to New Jersey Bank and Trust Company,
Clifton, New Jersey, approving an extension
of time to comply with membership condition
numbered 3.
Letter to Morgan Guaranty International
Banking Corporation, New York, New York,
granting permission to purchase stock of
Union Senegalaise de Banque pour le Commerce
et l'Industrie, Dakar, Republic of Senegal.
Letters to Manufacturers Hanover International
Finance Corporation, New York, New York,
granting permission (a) to purchase stock
of Malayan Industrial Development Finance
Limited, Kuala Lumpur, Federation of Malaya;
and (b) to purchase stock of The Industrial
Finance Corporation of Thailand, Bangkok,
Thailand.
2
3-4
2205
7/8/63
-3Item No.
Letter to the Federal Reserve Bank of
San Francisco approving a revision in
certain lower grades of the employee
salary structures for the Portland
and Salt Lake City Branches.
5
Letter to Chairman McClellan of the
Senate Committee on Government Operations
reporting on S. 1680, a bill to establish
an Office of Consumers within the Federal
Government.
6
Letter to the Bureau of the Budget relating
to a report by General Services Administration on hours of duty of Federal employees
in Washington.
7
Report on competitive factors (Burlington-Essex Junction,
Vermont).
There had been distributed a draft of report to the
Comptroller of the Currency on the competitive factors involved in
the proposed merger of Essex Trust Company, Essex Junction, Vermont,
into The Howard National Bank and Trust Company of Burlington, Burlington,
Vermont.
After discussion, during which reference was made to the possible
effects of the proposed merger on other area banks, particularly a
smaller national bank in Burlington that had received permission to
establish a branch in Essex Junction, the report was approved unanimously
for transmission to the Comptroller with the understanding that the
conclusion would be revised slightly to read as follows:
Essex Trust's service area is located entirely
within the primary service area of Howard National and,
while the application does not indicate the extent of
competition between them, it would appear that the two banks
are competitors. However, because of Essex Trust's relatively
2206
7/8/63
small size, its narrower range of banking services, and its
close relationship with Howard National, any substantial
degree of competition appears precluded.
The transaction would not add substantially to the
resulting bank's present resources, and should not seriously
affect the competitive ability of other area banks.
Report on competitive factors (Louisville, Kentucky).
There had
been distributed a draft of report to the Federal Deposit Insurance
Corporation on the competitive factors involved in the proposed merger
of Royal Bank and Trust Company, Louisville, Kentucky, into Bank of
Louisville, Louisville, Kentucky.
After discussion of the competitive situation in the area, the
report was approved for transmission to the Corporation; the conclusion
read as follows:
Consummation of the proposed merger of Bank of Louisville
and Royal Bank and Trust Company would eliminate the competition
existing between the two institutions. However, the proposal
would unite two of the smaller Louisville banks and place them
in a position to compete more effectively with the area's larger
banks and would broaden their scope of operation from industrial
banking to the commercial banking field.
Governor Robertson stated that he would have preferred to say
in the conclusion that the proposed merger would eliminate the competition
existing between the two banks, which were engaged primarily in the
industrial loan business, and would eliminate one of the competing
sources of such credit.
The principal purpose of the merger apparently
was to allow a broadening of operations from industrial banking to
commercial banking, but competition between the two banks would be
eliminated and he found nothing in the record to indicate a public
need for additional commercial banks in the area.
2ofja 1 V
r
-5-
7/8/63
Report on competitive factors (Trenton, Illinois).
There had
been distributed a draft of report to the Federal Deposit Insurance
Corporation on the competitive factors involved in the proposed acquisition
of assets of and assumption of liability to pay deposits in Farmers Bank
of Trenton, Trenton, Illinois, by Community Bank of Trenton, Trenton,
Illinois.
The report was approved unanimously for transmission to the
Corporation; the conclusion read as follows:
The proposed acquisition of assets and assumption of
liabilities of Farmers Bank of Trenton by Community Bank of
Trenton, both of Trenton, Illinois, would substitute a newly
organized, locally owned institution for an existing bank
with absentee ownership, which would enhance the competitive
position of the resulting bank.
Mr. Schwartz, Director, Division of Data Processing, and Mr.
Holland, Adviser, Division of Research and Statistics, entered the
room at this point.
Proposed survey.
There had been distributed copies of a
letter and draft questionnaires received from Chairman Patman of the
House Banking and Currency Committee under date of July
3, 1963,
regarding a proposed survey of insured commercial banks with respect
t, (b) correspondent
to (a) compensation and succession of bank managemen
banking, and (c) interest rates.
The letter requested suggestions on
the Board
the form and content of the questionnaires and inquired whether
would be willing to handle their collection and tabulation.
-6-
7/8/63
In discussion it was brought out that no action on the part of
the Board was called for at this time.
The item had been included on
as
today's agenda to assure that the members of the Board were informed
that the letter
to developments in connection with the matter, namely,
had been received
from Chairman Patman and enclosed draft questionnaires
on July
3, 1963, following some discussion on the previous day between
Board's
representatives of the Banking and Currency Committee and the
e Banks
staff, that the draft questionnaires had been sent to the Reserv
by letter
for comment on the same day, with advice to Chairman Patman
from Chairman Martin on July
5 that this procedure was being followed,
ts
and that the Reserve Banks had been requested to submit any commen
11, since
on the first two questionnaires not later than Thursday, July
onnaires
it was nnaerstood that Chairman Patman hoped that those questi
Monday,
could be dispatched to the banks selected for the sample by
July 15.
ng
The question whether the Board would be adverse to handli
had, of course, not
the collection and tabulation of the questionnaires
yet been resolved.
the
Following comments by members of the staff on the scope of
be involved in their
proposed questionnaires and problems that might
t would be
completion and tabulation, it was understood that the subjec
ts from the Federal
considered further following the receipt of commen
Reserve Banks.
The meeting then adjourned.
220
7/8/63
Secretary's Note: Governor Shepardson today
approved on behalf of the Board the following
items:
Letter to the Federal Reserve Bank of New York (attached Item No.
approving the appointment of Henry De Vries as assistant examiner.
8)
Memorandum from the Division of Research and Statistics recommending
acceptance of the resignation of Ruth H. Clarke, Editorial Clerk in
that Division, effective at the close of business July 19, 1963.
220
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 1
7/8/63
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
July
8, 1963
Board of Directors,
New Jersey Bank and Trust Company,
Clifton, New Jersey.
Gentlemen:
Under condition of membership numbered 3, New Jersey
Bank and Trust Company was to dispose, within a period of not
to exceed three years, of all corporate stocks owned at the
time of admission to membership. The Board has subsequently
extended this period to June 20, 1963. After considering the
circumstances and in accordance with the request in your letter
of June 7, 1963, the Board extends until June 20, 1964, the time
within which to comply with membership condition numbered 3.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
Item No. 2
7/8/63
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
AIDDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
July
8, 1963.
Morgan Guaranty International
Banking Corporation,
23 Wall Street,
New York 8, New York.
Gentlemen:
In accordance with the request, and on the basis of information furnished, in your letter of April 29, 1963, transmitted through
the Federal Reserve Bank of New York, the Board of Governors grants
purconsent for Morgan Guaranty International Banking Corporation to
Union
of
each,
chase and hold 2,500 shares, par value 10,000 CFA Francs
Dakar,
"),
("USBCI
Senegalaise de Banque pour le Commerce et l'Industrie
Republic of Senegal, at a cost of 25,000,00,0 CFA Francs, or approxiwithin
mately US$105,000 (equivalent), provided such stock is acquired
one year from the date of this letter.
The Board's consent is granted upon condition that Morgan
its holdings
Guaranty International Banking Corporation shall dispose of
that USBCI
event
the
in
of stock of USBCI, as promptly as practicable,
or disselling
ting,
underwri
should at any time (1) engage in issuing,
general
the
in
engage
(2)
tributing securities in the United States;
commodities
business of buying or selling goods, wares, merchandise, or
States exUnited
the
in
business
in the United States or transact any
;
business
foreign
or
ional
internat
cept such as is incidental to its
judgthe
in
which,
manner
a
in
ns
operatio
or (3) otherwise conduct its
of its
ment of the Board of Governors, causes the continued holding
be inapto
ion
Corporat
Banking
ional
Internat
stock by Morgan Guaranty
the Federal Reserve
propriate under the provisions of Section 25(a) of
er.
thereund
Act or regulations
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
BOARD OF GOVERNORS
Item No. 3
OF THE
7/8/63
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO TI-4E BOARD
July 8, 1963.
Manufacturers Hanover International
Finance Corporation,
44 Wall Street,
New York 15, New York.
Gentlemen:
In accordance with the request and on the basis of the information furnished in your letter of April 29, 1963, transmitted through the
Federal Reserve Bank of New York, the Board of Governors grants its consent for Manufacturers Hanover International Finance Corporation to
purchase and hold approximately 1.2 per cent of the capital stock of Malayan
Industrial Development Finance Limited, ("MIDFL"), Kuala Lumpur, Federation of Malaya, for Malayan $300,000, or approximately US$100,000(equiv
alent), provided such stock is acquired within one year from the date of
this letter.
The Board's consent is granted upon condition that your Corporation shall dispose of its holdings of stock of MIDFL, as promptly as
practicable, in the event that MIDFL should at any time (1) engage in
issuing, underwriting, selling or distributing securities in the United
States; (2) engage in the general business of buying or selling goods,
wares, merchandise, or commodities in the United States or transact any
business in the United States except such as is incidental to its international or foreign business; or (3) conduct its operations in a manner
which, in the judgment of the Board of Governors of the Federal Reserve
System, is inconsistent with Section 25(a) of the Federal Reserve Act
or regulations thereunder.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
1 3.4 )A
Item No.
BOARD OF GOVERNORS
4
7/8/63
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
41. NtS$,,,tP
July
8, 1963.
Manufacturers Hanover International
Finance Corporation,
44 Wall Street,
New York 15, New York.
Gentlemen:
In accordance with the request and on the basis of the information
furnished in your letter of May 28, 1963, transmitted through the Federal
Reserve Bank of New York, the Board of Governors grants its consent for
Manufacturers Hanover International Finance Corporation to purchase and
hold 2,000 ordinary shares, par value Baht 1,000 each, of the capital stock
of The Industrial Finance Corporation of Thailand ("IFCT"), Bangkok, Thailand,
at a cost of approximately US$100,000, provided such stock is acquired within
one year from the date of this letter.
The Board's consent is granted upon condition that your Corporation
shall dispose of its holdings of stock of IFCT, as promptly as practicable,
in the event that IFCT should at any time (1) engage in issuing, underwriting,
selling or distributing securities in the United States; (2) engage in the
general business of buying or selling goods, wares, merchandise, or commodities in the United States or transact any business in the United States except
such as is incidental to its international or foreign business; or (3) conduct
its operations in a manner which, in the judgment of the Board of Governors
Of the Federal Reserve System, is inconsistent with Section 25(a) of the
Federal Reserve Act or regulations thereunder.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
•4
KT,01,0
BOARD OF GOVERNORS
Item No.
OF THE
5
7/8/63
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
July
8, 1963
CONFIDENTIAL (FR)
Mr. H. E. Hemmings,
First Vice President,
Federal Reserve Bank
of San Francisco,
San Francisco 20, California.
Dear Mr. Hemmings:
The Board of Governors approves an increase in the
minimum of Grade 1 in the Portland Branch employees' salary
structure and in Grades 1 and 2 of the Salt Lake City structure,
effective September 3, 1963, as requested in your letter of
June 21.
Revised ranges for these grades, reflecting revised
minimum and previously approved maximum figures, are as
follows:
Grade
Minimum
Maximum
Portland
1
$2,640
$3,540
Salt Lake City
1
2
$2,640
2,700
$3,120
3,420
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
,
jt.
Item No.
BOARD OF GOVERNORS
6
7/8/63
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
OFFICE OF THE CHAIRMAN
July 8, 1963
4
The Honorable John L. McClellan,
Chairman, Committee on Government
Operations,
United States Senate,
Washington 251 D. C.
Dear Mr. Chairman:
This is in response to your letter of June 18, 1963, requesting
the views of the Board on the bill, S. 1680, "To establish an Office of
Consumers in order to secure within the Federal Government effective
representation of the economic interests of consumers; to act as a central
clearinghouse in Government for consumer complaints; to disseminate information to consumers; and for other purposes."
-While the Board is sympathetic with efforts to protect the
economic interests of consumers, it questions whether the proposed new
independent Office of Consumers would be desirable or effective for this
purpose. Existing public agencies should be guided in their decisions
by due consideration of consumers as well as other interests, all included under the general welfare. To the extent that any serious problems
may exist in the consumer field, the Board believes that it would be preferable to consider legislation addressed directly to these specific problems rather than to the creation of a new Government agency uhose statutory
responsibilities might be difficult to define.
Sincerely yours,
(Signed) Wm. MCC. Martin, Jr.
Wm. McC. Martin Jr.
2.„
Item No.
BOARD OF GOVERNORS
7/8/63
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
OFFICE OF THE CHAIRMAN
July 8, 1963.
The Honorable Elmer B. Staats,
Deputy Director,
Bureau of the Budget,
Executive Office of the President,
Washington 25, D. C.
Dear Mr. Staats:
the copy,
The Board of Governors has reviewed
nistration
Admi
ices
Serv
received from you, of the General
of duty
s
hour
of
ng
geri
report recommending further stag
that
eves
beli
and
on,
for Federal employees in Washingt
quessome
is
e
ther
ver,
it is an excellent report. Howe
to the
as
tion
niza
orga
s'
tion on the part of our employee
tes.
minu
45
to
od
peri
h
need for the increase in the lunc
in
cies
agen
nt
rnme
Gove
r
Should the lunch period at othe
of
d,
woul
d
Boar
the
tes,
minu
this area be revised to 45
r,
occu
this
ld
Shou
.
sion
revi
course, effect a similar
work hours to 8:30 a.m.
the proposed change in the Board's
5:15 p.m. is entirely agreeable.
ew this
We appreciate the opportunity to revi
report and present our comments.
Sincerely yours,
(Signed) Wm. McC. Martin, Jr.
Wm. McC. Martin, Jr.
7
BOARD OF GOVERNORS
Item No.
OF THE
8
7/8/63
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
July
8, 1963
CONFIDENTIAL (FR)
Mr. Howard D. Crosse, Vice President,
Federal Reserve Bank of New York,
New York 45, New York.
Dear Mr. Crosse:
In accordance with the request contained in your
letter of July 1, 1963, the Board approves the appointment
of Henry De Vries as an assistant examiner for the Federal
Reserve Bank of New York. Please advise the effective date
of the appointment.
It is noted that Mr. De Vries is indebted to First
Bank, New York, New York. Accordingly, the
City
National
of the appointment of Mr. De Vries is given
approval
Board's
ing that he will not participate in any
understand
with the
examination of that bank until his indebtedness has been
liquidated.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
@FedFRASER